Depreciation schedule without site inspection

Hi all,
We're about to turn our PPOR into an IP so I want to get a depreciation schedule done obviously.
As we built the property not long ago, I've been offered a discounted price if I can supply all the paperwork associated with said build. (I didn't ask, this was offered straight up by the person I spoke to)

I'm wondering if I should push them to actually do a site visit just to make sure nothing is missed?

Ros

 

Ros, nobody would have a problem with doing a site visit and charging more.

 

Roughly how much more would it be for a site visit?

I would like a fully walk through depreciation schedule prepared too.

I would spend the extra to have someone on site. I think it would be easy for someone who has not prepared a depreciation schedule to overlook something important. Depreciation schedules are not overly expensive and seem to have a great return on investment!

 

it's only $200 difference based on my experience.

 

That is very little. Based on the ROI I will definitely have a full walk through

 

I appreciate the feedback.
Of course no business would pass up charging a higher fee but I guess just for the piece of mind a walk through might be the way to go.
Even the most meticulous person can miss something either way.

 

Hi @Ros

My understanding is the depreciation schedule needs to be ATO tax compliant. Always ask for a discount as most will give a reduction to get your business. Once it's an IP and you do any further reno's in the future on the IP, don't forget the scrapping schedule for even more deductions.

 

im always amazed at the number of accountants who still dont know what a scrapping schedule is.

 

If you have an appliance not working anymore that needs replacing, eg. dishwasher, would you get a scrapping schedule done? Roughly how much is a scrapping schedule?

 

Generally speaking say your property becomes outdated and you decide to do a reno in a few years time you then best contact the people that did your original depreciation schedule.(they have all the info)

Let them know all items scrapped ie. 'Items removed' and 'also items added' to the house like broken dishwasher, replaced the whole bathroom, added a new benchtop, put new split aircon in. It's not necessary but you can take photos before and after, to support your claims.

The depreciation company then prepares your scrapping schedule. Usually it's emailed out.
Personally this scrapping schedule gave me a i few thousand more in deductions, worth doing. A lot of people including accountants as @MikeLivingTheDream says aren't aware of scrapping schedules.
This tip will save you thousands in deductions, so be sure to itemise what you've put in and taken out during reno's. I usually keep a little exercise book & pen with folder and just scribble things in with the date, item, cost, installation or removal date. The book ends up looking like a dogs brekky but makes things easy


Note: they often don't tell you but you can have free updates by letting them know you just installed that new dishwasher as it broke down, that you put new blinds in etc etc....

 

You generally wouldn't do a scrapping schedule for a single item. Cost is approx $200-300, company dependant

 

Everything is listed on the paperwork you fill out. The person walking through will just tick the boxes that you can tick yourself. If it's a relatively new build what's changed?
If they suggested a paperwork schedule I'd do that. Why pay for something you don't need?

 

Because without an inspection you won't know what you have missed.

 

Yep, agree with @Terry_w as my understanding is to be ATO compliant the depreciator must do a "physical inspection". No disrespect, you can give them your list but you're not a depreciator. They are the experts and do this every day, it is a simple task but they will depreciate things you would not have even considered. Better to save your brain cells, time and money and outsource......you will reap thousands in deductions
They usually guarantee they will get you more deductions than the cost of the report. Ask them. Report is deductible too!!

Eg. I had 1970's property, still had about $8k of deductions in it. Also got more deductions via the scrapping schedule for the reno

Check this link if in doubt
YIP mobile
Hope it helps!

 

Last time I order a Schedule I made a mental list of all the things I thought should be included. The assessor found about 5 things that I never thought of - pump on the water tanks for example. In fact I think I even forgot about the water tanks themselves.

 

Everything you can claim is listed on the forms, every room is listed, Tick a box. Depreciator from this forum has been doing this for a long time, im sure he knows what's depreciable. Send photos of you don't trust your eyes,

 

It's not a matter of knowing it is a matter of box ticking. I knew pumps were claimable but forgot I had one hidden away.

 

yeh im a fan of non site visits..maybe not good for the less thorough..
if ya worried get ya mate to go over it too

 

You wouldn't get a scrapping schedule for just one plant item. Something like a dishwasher will have its own line in a depreciation schedule. To work out its scrapping deduction, you simply find that line and work out how much depreciation you have yet to claim on it (starting cost minus what you've already claimed).

Scrapping schedules are really only for when you've performed a more substantial upgrade to the property and multiple items have been disposed of. They are also a necessity if what you've disposed of includes capital works with a residual value. E.g., if your property has a capital works allowance claimable on cabinetry, tiling and hard landscaping, and then you dispose of only the cabinetry, a QS will have to estimate how much of the total capital works allowance those cabinets constituted.

 

I have been rung by accountants (more than one !!) who accuse me of misinterpretation when their propertychat clients ask about scrapping. I generally ask them to refer all their property clients to me to avoid them making other mistakes. This annoys me - blaming me for what they dont know.

Tip : If you accountant doesnt know what scrapping deductions are then perhaps they arent that property savvy. I had one come to me in such a case who I helped later claimed $70,000. (yes he changed accountants) And the ATO did question it. And they had zero concerns. A rare example - Demo of a 1990s house rented for a year or two to build new properties to earn rental income.

Scrapping individual items has become harder since pooling came in but can still occur eg dishwasher, AC unit etc. When a item is in a pool it cant be scrapped. Items that are individual make their way into a pool when they reach the threshold. We often find this issue prevents a claim BUT we can confirm that a high rate is being used to write off assets. The importance for scrapping is to make sure you are eligible and have a guide to its likely benefit.

Eligible ?
Rental producing use of the property before and after the capital costs is incurred is critical.
Scrapping may also be a issue a taxpayer considers prior to ceasing to rent out a property.

Another way.
Scrapping can involve the taxpayer self-assessing the remaining effective life for some assets. We find it common for former IPs that becomes the PPOR again for a renovation to occur. The AC unit, kitchen and flooring etc all ripped out. So why not end the effective life of specific assets on the same last day of rent ?? No schedule is needed - Just a review of the present QS report. We can help with that. Or the QS. But acting BEFORE it occurs helps since sometimes it may not even be up to date.

Strata special levies and scrapping
Scrapping can also feature in strata units and I would STRONGLY encourage referral to BMT (or who ever prepared your schedule) to seek their project specific advice . Just recently a client asked how she may deduct the $40K of special levies for window, lifts and concrete balcony works for her IP. At same time building will have lifts modernised. Sadly, it wont be deductible but can attract three enhanced potential one-off or ongoing deductions

1. Scrapping of the residual value of the capital works to the apartment and common areas for the concrete cancer affected balconies and other areas to be jack-hammered and the lifts to be scrapped and replaced (BMT confirmed this with strata managers)
2. Div 40 depreciation update for new lifts
3. Div 43 capital allowance update for the new balcony and existing capital works